Behind the bankruptcy of Geos Corp., a major operator of English-language schools, are two words whose value can be recognized in any language: time and money.
Japanese studying English are increasingly using free Internet-based programs and steering clear of the high fees and rigid scheduling of traditional language schools.
“With an abundance of choices today, things are different from the days when learning English meant attending an English-language school,” said Masato Honma, who penned the book “Eigo wa Netto Doga de Minitsukero!” (Pick up English through video on the Net).
The shift in attitude among Japanese consumers was prompted by the October 2007 collapse of Nova Corp., once the largest language school operator in Japan.
The number of students attending foreign-language schools dropped from about 827,000 in February 2006 to around 336,000 this February, according to industry ministry statistics.
The decline was particularly sharp after Nova’s failure, which exposed problems concerning unpaid wages to teachers, suspected fraud and the difficulties getting refunds for canceled contracts.
Geos’ customers could feel the same sting after the company filed for bankruptcy protection Wednesday.
“I am shocked to the point where I cannot find the words,” said a 47-year-old woman from Hasuda, Saitama Prefecture, who had just paid one year’s worth of fees for her twins.
While Geos tries to deal with its nearly 37,000 students and 335 schools, Smart.fm, a website offering English-language lessons for free, continues to gain in popularity.
More than 1 million users are registered with Smart.fm, which was set up in October 2007 and offers more than 100 programs ranging from basic skills to advanced courses.
The majority of students today at language schools are workers who need English skills for their jobs and people planning to take the Test of English for International Communication (TOEIC) to improve their job prospects amid the economic downturn.
Jun Nakagawa, a spokesman for Berlitz Japan Inc., noted that many companies have reduced their employee training budgets particularly since the collapse of Lehman Brothers triggered the global financial crisis.
Now, businesspeople with no time to attend classes at schools make up a large portion of Smart.fm’s students.
Nakagawa also said free services may have taken away many would-be students looking to study English to enhance their image or kill time.
“The group who learned English because ‘it would be cool if I could speak English’ has disappeared from many schools,” the official said.
The trend will likely affect the hordes of native-English speakers who came to Japan for teaching jobs.
“The age when language schools could boast an abundance of native speaking instructors has ended,” said Yukio Otsu, a professor at the Institute of Cultural and Linguistic Studies at Keio University. “Some added value such as (teaching) ways of thinking, will be required.”
Nova
Students stunned by Geos bankruptcy
Thousands of students were caught off-guard and could be left out of pocket by the collapse of Geos Corp. on Wednesday, with many unaware the major English conversation school was in financial straits.
“I paid 300,000 yen-plus in February for annual tuition. I was concerned as Nova had collapsed a while ago, but I didn’t expect Geos would also go belly-up,” a company employee in his 20s said at the Jiyugaoka branch in Meguro Ward, Tokyo, referring to the major conversation school that went bankrupt in 2007.
A 22-year-old student who arrived at the Sangenjaya branch in Setagaya Ward said she paid 250,000 yen in annual tuition in mid-March.
“The school insisted that I pay it in a lump sum,” she said wistfully.
Geos started bankruptcy procedures Wednesday at the Tokyo District Court, which ordered its assets protected from creditors. The firm grew rapidly on the English conversation learning boom, but its finances worsened recently.
Flanked by a lawyer, Geos executive Hitomi Suhara announced at a press conference Wednesday that Geos had applied to the court to start bankruptcy procedures.
Geos founder and president Tsuneo Kusunoki did not attend the conference.
Suhara said it would be “rather difficult” to refund students who had paid their tuitions in lump sums because the firm’s financial condition “isn’t very good.”
A 43-year-old woman of Chofu, western Tokyo, arrived at the Geos’ Sengawa branch in Chofu on Wednesday afternoon after hearing of the bankruptcy.
“This is the second time this has happened to me [following Nova],” she said. “All I can do is laugh at my bad luck.”
She began sending her son, a fifth-grader, to the branch last year and paid more than 200,000 yen for annual tuition. However, he has so far attended classes worth less than half of the tuition.
As the woman was left out of pocket after paying more than 600,000 yen in a lump sum to Nova before it collapsed, she paid Geos in a smaller installment.
“I’m anxious as I don’t know if [my son] can go to another branch in the neighborhood,” she said. “He got along well with his instructor. It’s such a shame.”
A 28-year-old American instructor at the Tsu branch said he was informed about two weeks ago by Geos that his school would be shut down and it could not guarantee his salary for this month would be paid.
He was also told it would be difficult to refund students.
“I want to get my salary, but I feel really sorry for my students,” he said.
General Union, an Osaka-based labor union for instructors at English conversation schools, said it had received many complaints from Geos instructors over salary payment delays since last summer.
Katsuji Yamahara, chairman of the union, said: “We don’t know what will happen. We’ll help [Geos instructors] over their unpaid salaries.”
According to Geos, 230 of its 329 branches nationwide will be taken over by Nagoya-based G.communication Co. Geos will ask 7,000 students at the 99 branches that will be closed to transfer to other Geos branches.
Geos has set up a toll-free number for students with inquiries from 10 a.m. until 8 p.m. through Saturday. The number is 0120-134-446.
English schools need to hit the books
Geos bankruptcy typifies an industry faced with changing market, bad economy
With stiffer competition for fewer students amid a lingering recession, the nation’s language schools need to develop new and profitable business strategies if they hope to improve their situations, a fact only further highlighted by Geos Corp.’s announcement Wednesday that it had filed for bankruptcy.
“The current economic slump has led to a decline in the number of students, which meant we had to cut our advertising budget. As a result, the number of new students drastically decreased,” Geos executive Hitomi Suhara told reporters Wednesday in Tokyo.
In the 1990s, Geos had increased its number of campuses to more than 400 in an attempt to compete with its largest competitor, Nova Corp.
In 2008, Geos began closing, abolishing or consolidating unprofitable schools. But these measures came “too late,” according to one industry insider.
According to Yano Research Institute Ltd., the nation’s language school market for fiscal 2009 was estimated at 738.6 billion yen, down 10.6 percent from its fiscal 2005 value.
With the persistent economic downturn, language schools have seen a decrease in the number of commuting students and corporate language programs, contracts for which are considered to be steady forms of income, according to the research institute. Further complicating the matter was Nova’s 2007 bankruptcy, which turned many potential students against language school operators.
Meanwhile, the advent of new types of learning tools, including online English conversation programs and software for mobile phones, also have made competition fiercer within the industry.
There is an increasing number of price-busting schools, which hire Filipino teachers, who are native English speakers and work for less than other English-speaking peoples. These schools offer lessons for as little as several hundred yen for 30 minutes–without any admission fee.
On the other hand, as English instruction will be mandatory at primary schools starting next academic year, business endeavors geared toward children have grown steadily.
According to one Industry Division official at the Economy, Trade and Industry Ministry, “The industry needs to come up with a business strategy that targets growing fields, such as providing special lectures for children.”
Inquiries inundate Geos after bankruptcy
Toll-free telephone numbers provided by Geos Corp. for its students were inundated with inquiries Thursday, a day after the major English conversation school said it had begun bankruptcy procedures.
No employees were seen at Geos schools around the country, and calls to the Geos sales department went unanswered or were connected to a message saying that nobody was available to answer the phone.
The toll-free number the school set up for its students has been flooded with inquiries, but most calls were relayed to an answering machine saying the lines were busy.
The National Consumer Affairs Center received a number of complaints and inquiries from Geos students.
Although a few employees showed up at the head office in Shibuya Ward, Tokyo, on Thursday morning, all said they were in the dark about what was going on.
The Tokyo Metropolitan Consumer Center also has received inquiries by students wondering if their fees would be returned. The center plans to discuss this matter with Geos and the Consumer Affairs Agency.
G.communication Co., the Nagoya-based firm that will take over 230 of Geos’ 329 schools, and Geos jointly held a briefing Thursday for Geos employees. According to a G.communication spokesman, the meeting was for all Geos employees, including those who work at 99 schools that will be closed.
The two firms were reportedly sending letters urging students to transfer to schools taken over by G.communication.
Geos filed for bankruptcy at the Tokyo District Court on Wednesday with total liabilities estimated at 7.5 billion yen.
Geos chief to seek halt to bankruptcy proceedings
The founder and president of Geos Corp. said Thursday he will ask the Tokyo District Court to avert bankruptcy proceedings for the major language school operator.
Tsuneo Kusunoki expressed his intention during a telephone interview with Kyodo News a day after Geos filed for such proceedings with the court, which ordered the protection of the company’s assets from creditors.
“A company has come forward to extend financial support to Geos so it does not have to go bankrupt,” Kusunoki, 62, said.
An executive in charge of financial affairs, who is one of the three board members at Geos including Kusunoki, decided to file for bankruptcy protection, according to Kusunoki.
The Geos president said he is considering taking countermeasures as he did not agree with the executive’s decision.
The financial executive and some other Geos officials, who filed for the bankruptcy proceedings, told reporters Wednesday that although there was disagreement in the company’s management over whether it should go bankrupt, the application for court protection was legal.
But a lawyer for Kusunoki said the application may have constituted an abuse of rights.
Stopping the bankruptcy proceedings, however, may be difficult as it has already been decided that of the 329 schools operated by Tokyo-based Geos, 230 will be handed over to G.communication Co., a Nagoya-based company which took over the assets of another bankrupt language school operator, Nova Corp., in 2007 and turned them into a profitable operation.
“I would like to protect as many students and employees as possible,” Kusunoki said, adding that the transfer of so many schools to G.communication would make it difficult to save them.
Kusunoki is expected to voice his opposition when the Tokyo court holds a hearing with parties concerned to decide whether it should order the launch of bankruptcy proceedings.
Meanwhile, G.communication said 201 of the 230 schools it will take over from Geos will resume classes Friday.
Geos was founded in 1973 in the city of Tokushima, Tokushima Prefecture, and the number of its schools peaked at 500 during its heyday.
The company, which says it has 2,100 employees on its payroll, followed an expansionary policy of setting up English language schools in other countries such as Canada, Australia, Singapore and South Korea.
http://mdn.mainichi.jp/mdnnews/news/20100423p2g00m0bu002000c.html
Classes resume at bankrupt language school Geos
G.communication Co., which has taken over 230 of the 329 schools run by bankrupt major language school operator Geos Corp., resumed classes at Geos schools on Friday.
Classes were reopened at 201 schools and will resume later at 29 other schools, while 99 schools were closed.
On Wednesday, Tokyo-based Geos, mired in debts of 7.5 billion yen, filed for bankruptcy proceedings with the Tokyo District Court, which ordered its assets protected from creditors.
Of Geos’s total of about 36,800 students, 29,000 are registered at the Geos schools taken over by G.communication based in Nagoya.
Students at the Geos schools being closed can continue their studies at nearby Geos schools or at schools of Nova Corp., a language school taken over by G.communicatin in 2007, for tuition already paid.
Refunds will not be granted for classes that students have not yet taken, according to Geos.
http://mdn.mainichi.jp/mdnnews/news/20100423p2g00m0bu042000c.html
Geos English school files for bankruptcy
Major English conversation school operator Geos Corp. said Wednesday it has started bankruptcy procedures at the Tokyo District Court, which ordered its assets protected from creditors.
The Tokyo-based school’s total liabilities are said to be 7.5 billion yen.
The school operator said it would hand over about 230 of its 330 schools nationwide to Nagoya-based G.communication Co. and shutter the remaining 100.
The transfer would allow 29,000 of Geos’ 36,800 students to continue studying at their current schools, Geos said. Additionally, about 7,800 students at the locations slated for closure could keep studying if they agree to transfer to nearby Geos schools.
However, the school operator said it would be difficult to refund tuition that already has been paid.
Geos also had focused its business on assisting students wanting to study abroad and arranging homestays with families in other countries.
Geos ran many TV advertisements, using its name recognition to pursue an expansionary policy, including establishing an affiliated company in Australia.
However, the school operator has lost students recently due to intensifying competition in the English conversation school industry and the sluggish economy.
Geos encountered financial difficulties after plunging into the red in the business year ending in December 2008 due to plummeting sales and losses incurred by the closure of some deficit-making schools.
G.communication also took over the operations of collapsed major English conversation school operator Nova Corp. in 2007.
Future for Geos students at closing schools uncertain, no tuition refunds
Students of bankrupt English-conversation school operator Geos Corp. are frustrated with 99 out of 329 schools nationwide closing and no refunds for those who have already paid this year’s tuition.
Some 230 Geos schools will continue operation under the management of G.Communication, while the other 99 will be closed. Geos and G.Communication made a joint statement on Wednesday that they would “work for the best interests of the students,” but students who won’t be able to continue classes at their schools are concerned.
A 22-year-old female student at a closing Geos school in Sangenjaya in Setagaya Ward, Tokyo, says she just paid her entire yearly tuition last month. She had previously paid her tuition on a monthly basis. However, around autumn of last year, the school started repeatedly recommending she pay her yearly tuition in a lump sum.
The student’s mother is a former student at English conversation school chain NOVA, which also went bankrupt. She warned her daughter that it was suspicious that the school was trying to get her to pay so much money up front. The student says she hesitated to pay until the last minute.
“If they recommended the lump payment while knowing they would be going bankrupt, it’s depressing,” she said sadly.
Since no refunds will be offered, the student is considering continuing at the nearest school that G.Communication will take over, but said, “It’s far from my home, and I’m worried that a new teacher wouldn’t teach in the same way as the old one.”
Elsewhere, at a school in Nara that is scheduled to close, a 23-year-old American teacher who had come to find out the latest news complained angrily, “At yesterday’s meeting, the school manager told us that Geos’s financial condition was fine, but this morning we got an e-mail about the bankruptcy. We were lied to. If I don’t get paid, I can’t afford a flight back home.”
Geos and G.Communication have set up a toll-free line to address students’ concerns at 0120-1344-46. The line is open from 10 a.m. to 8 p.m.
http://mdn.mainichi.jp/mdnnews/news/20100422p2a00m0na017000c.html
Bankruptcy of Geos blamed on shrinking market for English conversation schools
The bankruptcy of major English school operator Geos Corp. is largely attributable to the shrinking market for English conversation schools in Japan, as a result of the declining birth rate and the economic downturn.
“The entire industry has been in a slump, and we lost a large number of students because of the recession,” Kazumi Suhara, a board member of Geos told a news conference on Wednesday as she explained the cause of the bankruptcy.
The market began to expand rapidly about 30 years ago, and a large number of English conversation schools were opened in urban areas.
Geos rapidly expanded its network of English conversation schools by aggressively airing TV commercials.
However, the competition between English schools has been intense in recent years as the number of students declined due to the recession following the bursting of the speculation-driven, asset-inflating bubble economy and a decline in the population of students and schoolchildren.
NOVA, another major English school operator, went under in October 2007.
In the same month, the maximum amount of government subsidies for those who take lessons at English schools, which contributed to the English-learning boom, was lowered from 200,000 yen a year to 100,000 yen.
As a result, the number of students at English conversation schools nationwide decreased from approximately 750,000 in February 2007 to about 360,000 a year later.
The collapse of U.S. financial giant Lehman Brothers in the autumn of 2008 dealt a further blow to the industry.
“Households have lost the leeway to pay for language classes and other lessons,” says an executive with a major bank.
The number of students at Geos, which stood at some 40,000 as of the end of September 2008, had fallen to about 36,800 by the time it collapsed, according to Teikoku Data Bank.
The company fell into a vicious circle of deep cuts in advertising expenses causing the number of those who sign up for lessons at Geos to decline, according to Suhara.
Its study abroad program also contributed to its bankruptcy. A subsidiary in Australia had its visa revoked in December last year because of a shortage of funds, and was forced to close all its eight schools in the country.
“It worsened the already severe financial situation,” says lawyer Nobuaki Kobayashi, who serves as bankruptcy receiver for Geos.
G.Communication Group, which is set to take control of Geos’ schools, has been successful in reviving NOVA, which it also took over, by streamlining its operations. Specifically, it relocated its NOVA schools to the premises of cram schools it operates and took other cost-cutting measures.
Nevertheless, few are optimistic about the future of English schools as they face growing competition from online schools, such as one that allows students to take online lessons from Filipino teachers — whose wages are comparatively low — and costs only 8,000 yen a month.
It remains to be seen if G.Communication will be able to put Geos and NOVA on a path to stable growth.
http://mdn.mainichi.jp/perspectives/news/20100422p2a00m0na001000c.html
Geos Files For Bankruptcy
Geos Corp. said Wednesday it has filed for bankruptcy protection with the Tokyo District Court, saddled with debts of about 7.5 billion yen.
The operator of English conversation schools will hand over 230 schools in Japan to subsidiary G.communication Co. The rest will be closed.
G.communication, which took over schools from Nova Corp. in 2007 when the latter went under, manages about 470 English conversation schools.